18-12-2018 09:00

How Volvo’s treasury is becoming a strategic player

Treasuries want to be more strategic—but it’s not an easy road. They’ll need to recruit the right skill sets, take a leading role on digitalisation and be early adopters of new technologies. Nordea’s Erik Seifert met with Elisabeth Mosséen, Group Treasurer at Volvo Cars, to learn from her experience of building a strategic treasury that’s actively engaging with the business to support corporate goals.

Treasuries hope to become more strategic players by 2025, engaging with the business on key objectives. That was one of the clear findings in our latest Future Treasury Report. Yet despite their ambitions, most treasuries are still focused on tactical, short-term goals. Although they want to benefit from the deployment of new technologies, they’re not seen as a digitalisation partner by the wider business.

Of course, a few treasuries are ahead of the curve. Here’s how the Volvo Cars treasury is putting its strategic vision into action, and playing a driving role in digitalisation.

Starting from scratch

In 2010, Chinese car manufacturer Geely bought Volvo Cars from Ford Motor Company. This change in ownership was a significant milestone for Volvo. Prior to the acquisition, the company had few corporate functions and only a few people in the treasury. Mosséen attributes some of the treasury’s success and rising profile as a strategic function to this fresh start.

“Eight years ago, we were just a division within Ford, reporting to the mothership. After the acquisition, we decided on a roadmap with a very ambitious target: to be a world-class treasury function within five years,” she says. “We had to start from scratch, but that gave us an advantage. We weren’t held back by old systems or processes—we were able to do things well from the start.”

With the company going through a large-scale business transformation, it was the perfect time for the treasury to put itself forward. “When you’re in a company that’s going through a major transformation, everyone needs to roll up their sleeves and work towards a common goal. So the wider business was hungry for support—and we were able to give it to them.”

Mosséen believes Volvo was given a huge opportunity in this respect. “Many Nordic treasuries are dealing with the problem of legacy infrastructure,” she explains. “That’s been exacerbated by treasuries’ objectives changing—often they’ve started as a profit centre and been siloed from the rest of the company. So these treasuries have bigger steps to realise their strategic goals. It takes time and patience.”

Creating a roadmap

In 2012, the new Volvo treasury developed its strategic roadmap, with a clear vision of the future. “The main goal of our roadmap was to be a strategic partner and add value to the business in all the different areas. We knew that’s where we wanted to be,” says Mosséen.

“We didn’t want to just set up policies in areas like financial market risks or cash management—we wanted to create long-term objectives together with the business leaders. That meant we needed an infrastructure that could be integrated with the wider business systems.”

Mosséen stresses the importance of maintaining this roadmap and building towards it one step at a time—even when short-term priorities shift. “We’ve had this roadmap for almost six years now. During that time, our daily activities have changed, but the long-term vision hasn’t. We set ourselves short-term challenges but never forget the overarching goal—to be fully integrated with the business going forward.”

The right balance of skills

It’s not enough to have a strategic plan—you need key skills to deliver on these goals. Mosséen says that having the right balance of people has been critical to their success.

“Obviously in the treasury, you need people with specialised skills in risk management, foreign exchange, liquidity and regulatory compliance, for example,” she explains. “But we’ve also recruited people from the business side, and this has helped us understand the needs of the business, so we can identify areas where the treasury can add value. It’s also expanded our network of strategic contacts—this helps us make sure that treasury directives are followed and strengthens accountability in the wider business.”

Mosséen points out that skill requirements will vary by region. “We’re headquartered in Sweden, but really we’re a global company. Many of our challenges are at the regional level. In China for example, it’s important for us to have people on site who are well-informed and up to date about local regulations, as these tend to be very changeable. It’s about finding a mix of local competence, business understanding and treasury skills—all while keeping a global perspective.”

Becoming a digitalisation partner

As more businesses undergo digital transformation, treasuries need to get involved, or they risk becoming passengers on the journey. In 2018, Volvo announced its plans to move from being purely a carmaker to a consumer services provider. “We’re in the process of changing our business model from being purely a B2B provider to having more direct B2C interactions with end consumers. That means a lot of things need to change within the company, and of course it also impacts the treasury,” explains Mosséen.

“As the treasury, we want to be involved in that transformation—we have to be. And it’s not just about policing change or telling the business what things it can’t do, or guarding our old ways and policies. We have to be agile. We need to proactively drive change, give back to the business and add value.”

Of course, being actively involved with digitalisation takes time—something treasurers are often in short supply of. “To improve efficiency, you need to be more of a treasury generalist. If you go out to a business unit, you should be able to answer questions on everything from FX to cash management—rather than having to send three or four people to each meeting,” Mosséen says.

“Another way of freeing up time is outsourcing rule-based activities to a finance operations shared service centre,” she adds. “This means treasurers can focus on value-adding activities and new challenges.”

Embracing new technologies

Treasurers also need to become confident at working with new technologies. Mosséen says they’re striving hard to achieve this. “From a treasury point of view, we need to embrace the new technologies that are coming. It’s not just about driving efficiencies—it’s about really understanding and being able to implement new technologies, like machine learning and artificial intelligence.”

And it’s important treasuries take a leading role. “We need to position ourselves as early adopters, and dare to pilot some of these projects,” says Mosséen. “Blockchain, for instance, is something we’re looking into—trying it on trade finance products. If it works, we can give that knowledge to the wider company and apply it to their processes. That’s another way we can add value to the business.”

Working with the right partners

Mosséen believes partnerships are key to success. “We don’t just add value to the business through our strategic insights and discussions, we also add value by connecting the business through our relationships with banks and other stakeholders,” she says. “This could become even more important to coordinate going forward, as we might start to work with other parties like FinTechs on the latest technology trends.”

The relationship between the treasury and its banks is vital. “Just as we’ve invested in building a strong partnership with the business side of the company, I expect our core banks to invest in building a partnership with us,” says Mosséen. “That’s why it’s important to find banks and partners that understand your business—they should have an intimate understanding of the environment your company operates in.”

Asked if she had any final words, Mosséen emphasised the importance of a mindset shift. “You need the right culture and mindset—it’s not just about building IT skills. Look at startups for inspiration and aim to adopt their pioneering culture. Then you can raise the profile of your treasury by keeping yourself at the forefront of technology.”

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